Worksite marketing response rates continue their upward spiral. For benefit brokers who haven't already done so, now is a critical time to brush up on effective worksite marketing techniques. Avon, Conn.-based Eastbridge Consulting Group reports that 95 percent of respondents to its Worksite/Voluntary Industry Confidence Index (that includes worksite carriers, third-party administrators and benefit brokers) have a favorable 12-month market outlook. In fact, 37 percent expect worksite-voluntary sales to increase significantly in the near future. A full 77 percent of employees from worksite carriers expect their company's worksite line to be either "much more" or "a little more" profitable.
This comes on the heels of a 2005 Eastbridge report that found benefit brokers claimed the largest percentage of worksite sales of any single producer segment - a trend that is expected to continue. For diligent benefit brokers looking to increase their voluntary enrollment rates, the worksite opportunity is wide open.
Al Barthelman, president of AB & Associates, a worksite marketing consulting firm in Cape Elizabeth, Maine, says a successful approach to worksite marketing includes a thorough consideration of the following questions:
- Target markets - What employer groups do I want to target (industries, size, region, etc.)? What products and services do those groups want for their employees?
- Product design - Will insurance products use a group or individual contract platform, or a combination of the two? What price will be attractive? How much must I charge to cover service and acquisition expenses?
- Account acquisition - How will my sales compensation and commission be structured?
- Enrollment - Do I expect employee sales presentations to be one-on-one, groups, over the Internet or through other technology? How do I assure quality and accuracy in sales presentations?
- Service - Will my administrative system support top-quality service to both the plan sponsor and the end consumer? Are my underwriting practices streamlined and efficient?
- Managing the business - Can I track the business at the account and consumer levels? What does my company do well? What should we outsource? Do we have adequate resources focused on the business?
"From a worksite marketing standpoint, the advent of the 401(k) was perfect because it involved employees in their own benefit plan decision-making process," Barthelman explains. "Consumer-directed health care plans are now acting in the same way. There is now more of an assumption in the industry that employees will take more responsibility for choosing from the benefits that the employers offer."
Ken Snyder, a benefit consultant with Amarillo, Texas-based Worksite Marketing Concepts, agrees and notes that core benefits are usually employer sponsored. Any marketing to be done, therefore, happens well before the broker gets to the worksite. For this reason, worksite marketing most often involves voluntary products.
"Most employees have a limited amount of disposable income to use on voluntary products," Snyder says. "But right now, voluntary products are increasingly important because they fill in the gaps not covered by the employer's core offerings. Because health care costs continue to skyrocket, we're seeing a huge increase in the number of medical supplement products that are sold."
Barthelman adds that voluntary products demand employer commitment and employee time that could be used elsewhere, and telling the employer it costs little or nothing to offer them, as many brokers are currently doing, is incorrect.
"There is an opportunity cost and we really can't pitch it as having no cost," he points out. "There are non-dollar costs associated with things like payroll deduction."
EJ Coon, a state manager with The Abacus Group, a managing general underwriter based in Albany, Ga., says success in the voluntary worksite space depends on the degree of flexibility and customization available in the products brokers offer.
"The 'me-too' attitude just won't cut it," he says. "You have to have something completely different. We offer a critical illness product that's so comprehensive it's replacing many cancer policies. Also, we're seeing good penetration with our long-term disability and short-term disability products because they are rated for the group and guarantee issued."
Apart from product differentiation, both Barthelman and Snyder emphasize that any effective worksite marketing strategy must minimize disruptions to the business. Telephone, laptop and Internet enrollment strategies are helping, but it's something benefit brokers continue to struggle with.
"People - especially employers - want as little disruption as possible at the worksite," Barthelman says. "Although it's desirable to get the one-on-one face time with employees, it usually doesn't happen - at least not right away."
Snyder sees a mixed attitude, one that depends on the individual employer and the culture of the business. Some employers want one-on-one meetings, others want a large group meeting that will get the information to as many employees possible in the shortest amount of time.
Whichever situation he encounters, Snyder says he has to be more prepared than ever. Because more owners, employees and plan administrators are familiar with purchasing voluntary products, their education levels are higher than in the past.
"We actually know of one insurance company that will offer $1,000 to everyone who comes to hear their pitch," he says with a laugh. "We don't do anything like that. But having the Section 125 plan in place is a good start with worksite marketing. It doesn't necessarily have to be in place in order for the broker to be successful, but it helps. Because of the pre-tax status, it's economical for employees and employers to save a bit on the payroll tax. Also, the employees have to commit the dollars for one year and can't suspend the payments. They have to be in there at that point, and so it's easier to cross-market our other ancillary products."
Ultimately, with benefit costs, and employer frustration, showing little signs of improvement, worksite marketing of voluntary products offers perhaps the greatest source of growth for benefit brokers. But an increasingly educated clientele means an exponential amount of preparation and creativity is required.
